Section 279 Income Tax Act 2025 – Income Escaping Assessment

Section 279 of the Income Tax Act 2025 deals with the provisions related to income escaping assessment. This section provides power to the assessing officer to assess or re-assess the income as reported by the taxpayer. Parallel provisions are covered under section 147 of the Income Tax Act, 1961. 

What is Section 279 of the Income Tax Act 2025?

Section 279 deals with the provisions related to income escaping assessment. Whenever an income has not been considered in an assessment, the assessing officer has the power to consider the income into the total taxable income. This power can be exercised irrespective of the fact that assessment has been carried out or not. Time-limits, notice requirements, etc are covered under section 280 to 286 of the Income Tax Act, 2025.

What Does 'Income Escaping Assessment' Mean?

Whenever any taxable income has been missed out of assessment, the department has the power to carry out assessment procedure, and recompute income, deduction, losses etc. The income could have been wilfully concealed by the assessee, or be missed out due to inadvertence.

When Can the Assessing Officer Invoke Section 279?

When an income comes to notice of the the assessing officer, which has not earlier been considered for assessment, he can invoke assessment under section 279. This can be done irrespective of whether the department has already carried out the assessment procedure or not. This means, powers under section 279 can be invoked even when the assessment procedures are already completed by the department. 

Simply speaking the officer can the power to conduct assessment for the second time under this section.

Powers of the AO Under Section 279(1) and 279(2)

Section 279 grants two powers to the assessing officer.

1. An income can be subject to assessment, even when the assessment has already been completed for the assessessment year. 
2. If the assessing officer comes across any income related to any other assessment year, he can consider that into his assessment without complying to the notice procedures as mentioned under section 281 and 280 of the act.

Notice Under Section 280: What Happens After Section 279 is Triggered?

1. When the income escaping assessment provisions are triggered, the assessing officer should send a show cause notice to the assessee as per section 281(1). 
2. On receiving the response received from the assessee, the assessing officer considers the information available with him, and the response of the assessee, to determine if the income needs to be assessed further or not.
3. On consideration, if the assessing officer determines that further assessment is required, they shall pass an order under section 281(3).
4. They shall send a notice under section 280 of the act, along with the order passed under section 281(3).
5. In certain cases, the procedure to issue show cause to the assessee and pass the order is not required. They are:
   1. Information received under Section 260 (Faceless collection of information)
   2. Directions from the Approving Panel as per section 274 of the act
   3. Any finding or direction obtained from order passed under this law or any other law.

Information that Suggests Income has Escaped Assessment

• Risk management strategy formulated by the Board.
• Audit objection that assessment has not been made as per the procedures mentioned in the act.
• Information obtained from agreement entered with foreign countries as per section 159 of the act.
• Information obtained using faceless collection of information scheme under section 260.
• Any information which requires action in consequence of the order of a Tribunal or a Court.
• Survey conducted under section 253 of the act.
• Any finding or direction obtained from order passed under this law or any other law
• Directions from the Approving Panel as per section 274 of the act

Section 279 vs Section 147 of the Old Income Tax Act 1961

How to Respond to a Reassessment Notice Under Section 279?

• Before receiving the notice under section 280, you will receive a Show Cause Notice (SCN) under section 281 of the act (in most cases). Therefore, if you can provide a satisfactory explanation to the SCN, further proceedings may be dropped. 
• If you still receive a notice under section 280, it is necessary to file a return on income, considering all the taxable income, eligible deductions and exemptions. It is recommended to ensure the return is accurate, and full documentary evidence is available to back every income, deduction and exemption.
• There are time limits prescribed under these sections, for different notices and SCN. It is imperative to ensure that the notices are responded on time.
• Even though the error is minor, or the assessment is already is completed for the tax year, you can still receive notice under section 279.